The Effect Of Cross-border Mergers And Acquisitions On Firms Performance

The pace of cross-national mergers and acquisitions of Chinese enterprises is speeding up,and some scholars even proposed that 2016 is the year of Chinese enterprises overseas mergers and acquisitions.Thanks to the accelerating supply-demand reform and going-out strategy,the total number of overseas mergers and acquisitions by Chinese enterprises is growing in scale and quantity,and surpassed that of United States and Germany in the second half of 2016.China has become the biggest country in the field of cross-border mergers and acquisitions.However,the completion of M&A does not mean the realization of the value of M&A.The related research has revealed that 70% cross-national M&A cannot generate expected value.Therefore,it is necessary to measure the performance of cross-border M&A of Chinese enterprises and to analyze the factors that affect the performance of M&A,which is of profound theoretical and practical significance.In this paper,we selected the listed companies in China’s Shanghai and Shenzhen stock exchanges that has experienced cross-national M&A between 2007-2010 as the research samples,and used supper-efficiency DEA method to measure the performance of them from prior five years of M&A to latter five years of M&A.Then,we use the Wilcoxon signed rank test to statistically test whether cross-border M&A significantly improved the performance of Chinese enterprises.This study found that the performance of Chinese enterprises after cross-national M&A is significantly higher than that before cross-national M&A when significance level is below 0.01.However,the performance of sampled companies in the year when cross-national M&A happened is not higher than that in prior years.Treating the measuring results before as dependent variables,we then use multiple linear regression model to discuss the influence factors affect performance improvement of sampled companies brought by cross-national M&A.The empirical results reveals that enterprise growth and previous experiences about international M&A have a considerable positive effect on the performance improvement,and controlling shareholder property and cultural differences among countries or regions negatively affect performance improvement with a significant level.And,the effective time of these four factors is not same due to the complexity of cross-nation M&A.Specifically,enterprise growth and cultural differences start to affect performance improvement early,previous experiences about international M&A begin to affect it from roughly second year of cross-national M&A,and controlling shareholder property only affect it late.Finally,this paper summarizes the full text and proposes some suggestions for Chinese enterprises to effectively carry out cross-national M&A.